Based on their performance trajectory in the year, Nigeria’s four largest deposit money banks (DMBs) by assets, will raise the banking industry’s total assets with a minimum of N15 trillion in 2022, THEWILL findings have revealed. The four DMBs, all Tier-1 banks, are Access Corporation with N11.73 trillion, Zenith Bank N9.44 trillion, FBN Holdings N8.93 trillion and United Bank for Africa N8.54 trillion – as of December 31, 2021.
Data from the four banks’ Q3 2022 (nine months) interim reports showed a remarkable growth trajectory between FY 2021 and Q3 2022, as well as Q3 2022 numbers compared with the corresponding period (Q3 2021).
In Q3 2022, Access Corporation grew assets to N13.41 trillion from N10.33 trillion in the corresponding period, representing a 30 percent rise. Zenith Bank’s assets rose to 11.34 trillion from N8.75 trillion in Q3 2021 or 30 percent increase. FBN Holdings (FBNH) recorded a balance sheet strength of N9.85 trillion against N8.51 trillion in the corresponding period. United Bank for Africa (UBA)’s assets jumped by 10.6 percent to N9,22 trillion from N8.34 trillion in Q3 2021.
To arrive at the projected N15 trillion, each bank’s Q3 figures were divided by three (quarters) and totaled. The average outcome was N4.47 trillion, N3.78 trillion, N3.28 trillion and N3.1 trillion for Access Corporation, Zenith Bank, FBNH and UBA respectively. By implication, Access Corporation’s balance sheet growth is projected at N16.25 trillion in FY 2022, while Zenith’s is expected to hit N13.22 trillion. FBNH would record a balance sheet growth to N12.21 while UBA’s assets are projected to hit N11.44 trillion. This newspaper had earlier reported that Africa’s Global Bank (UBA) would hit and exceed the N10 trillion assets mark in 2022.
Commenting on the significance of strong assets quality, Professor of Finance and Accounts at the Nasarawa State University, Keffi, Muhammad Mainoma, had told THEWILL that strong assets base is strategic to the development of any business because an enterprise is handicapped if it trades with a lean balance sheet.
“Strong asset base signifies that a business is strategically positioned to take advantage of its environment. For a bank, there is no time that people will not need money. Once a business is focused and invests in areas that people always need, it will not lose. This explains the continuous growth (in assets) despite the difficult operating environment,” Mainoma, immediate past President, Association of National Accountants of Nigeria (ANAN), had told this newspaper in a note.
Nigerian banks’ total assets rose to N59.24tn as of the end of 2021 compared to 50.99tn in 2020, according to CBN. The apex bank disclosed this in the personal statements of members of the Monetary Policy Committee (MPC) in March 2021.
According to CBN, a member of the MPC, Kingsley Obiora, had said, “The banking system continued to sustain its soundness, safety, and resilience amid economic recovery. The total asset of the banking industry increased from N50.99tn from end-December 2020 to N59.24tn, representing an increase of 16.18 per cent, driven by balances with CBN/banks, OMO bills, and credits.”
This means that the four major Tier-1 banks (Access Corporation, Zenith Bank, FBNH and UBA) with a total assets of N38.64 trillion controlled 65.3 percent of the total banking industry assets as of 2021.
Further investigation revealed that the four banks topped both the banking industry and the 157 listed firms on the main board of the Nigerian Exchange (NGX) Limited by assets in 2021. They also ranked among the top seven by revenue and top six by profit and employees respectively.
By revenue in 2021, Zenith Bank raked in N765.56 billion to lead the pack, followed by FBNH with N757.30 billion. Access Corporation recorded a revenue haul of N734.28 billion ahead of UBA’s N660.22 billion. The four major banks posted a total revenue of N3 trillion in 2021.
The four banks also played in the league of top listed companies by net profit in 2021 where they pooled a total of N674.52 billion; with Zenith Bank hauling N244.56 billion, GTCO N174.4 billion and Access Bank N160.20 billion. FBNH and UBA recorded N151.08 billion and N118.68 billion respectively.
UBA topped the list by employees with 10.19 million followed by FBNH 8.17 million. Access Corporation and Zenith Bank had 2.87 million and 6.29 million respectively. Total employees in the four major Tier-1 banks totaled 27.52 million in 2021.
Access Incorporation’s assets base is boosted by the group’s singular bid to promote global brand through merger and acquisition In June, 2022, the group entered into an agreement to acquire the entire 83.4 percent equity stake held by Centum Investment Plc, a Kenyan-based investment company, in Sidian Bank Ltd, for the sum of about N15 billion ($37 million).
“Sidian will be merged with Access Bank’s subsidiary in Kenya, Access Bank Kenya, to create a stronger banking institution better positioned to serve the Kenyan market,” the financial institution said in a statement.
The deal was the bank’s sixth acquisition in five years.
In 2018, the lender acquired Diamond Bank through a merger and acquisition deal, completed in 2019. In the fourth quarter of the same year, it acquired Transnational Bank (Kenya) Plc. In August 2020, the bank also announced the acquisition of Cavmont Bank Limited, Lusaka, Zambia, through a merger deal and finalised the process in January 2021. It also acquired Grobank in South Africa.
Other banks it had acquired include Marina International Bank Limited, Nigeria, Capital Bank International Plc, Nigeria, and African Banking Corporation in Mozambique. In October 2022, Access Corporation announced its acquisition of First Guarantee Pension Ltd (FGPL) and First Ally Asset Management Ltd and the entire issued shares of Actis Golf Nigeria Ltd, owners of Sigma Pension.
A look at the bank’s reports showed that it has maintained the tempo in credit expansion as a priority to stimulate the economy while its assets base soars.
Access Bank is Nigeria’s largest banking group, accounting for 19 percent of banking system assets at the end of the financial year 2021, according to Fitch Rating which applauded the bank’s acquisition strategy. Fitch analysts expect the acquisition trend to continue, strengthening Access Bank’s franchise and geographical diversification. It said Access Bank has a record of integrating domestic acquisitions but a large number of cross-border acquisitions creates execution risks and may pressure capital.
About the Author
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
